Method of Preparation

1. Total Method or Gross Trial Balance.
2. Balance Method or Net Trial Balance.
3. Compound Method.

1. Total Method or Gross Trial Balance : Under this method, two sides of the accounts are
totalled. The total of the debit side is called the “debit total” and the total of the credit side is
called the “credit total”. Debit totals are entered on the debit side of the Trial Balance while the
credit total is entered on the credit side of the Trial Balance.
If a particular account has total in one side, it will be entered either in the debit column or
the credit column as the case may be.
Advantages : 1. It facilitates arithmetical accuracy of the accounts.
2. Extraction of ledger balances is not required at the time of preparation
of Trial Balance.
Disadvantages : Preparation of final accounts is not possible.
2. Balance Method or Net Trial Balance : Under this method, all the ledger accounts are
balanced. The balances may be either “debit-balance” or “credit balance”.
Advantages : 1. It helps in the easy preparation of final accounts.
2. It saves time and labour in constructing a Trial Balance.
Disadvantages : Errors may remain undisclosed irrespective of the agreement of Trial
Balance.
3. Compound Method : Under this method, totals of both the sides of the accounts are
written in the separate columns. Alongwith this, the balances are also written in the separate
columns. Debit balances are written in the debit column and credit balances are written in the
credit coloumn of the Trial Balance.
Advantages: It offers the advantage of both the methods.
Disadvantages: Lengthy process and more time consumed in the preparation of a Trial
Balance.